The person who dies with no Will, and no living heirs, leaves everything to the State What happens to the interstate property owned by a person who dies (a “decedent”) without a will? The “intestate” property will strictly be determined by state inheritance law. In Washington State, for example, the law provides that a decedent’s spouse inherits all of the decedent’s property. If the decedent is not married at the time of death, the law provides for successive inheritances by more and more distant relatives, starting with the decedent’s children. If there are no such relatives, or if they cannot be found, the decedent’s property becomes the property of the State.

Distribution of property according to a plan

A Will allows a person to provide for the distribution of property exactly as he wishes In Washington, as in most United States jurisdictions, individuals have full control over the disposition of their property at death. Generally, the law allows a person to make a Will during his or her lifetime, providing for any legitimate distribution. The Will will be enforced and respected, if it is properly drafted and executed. Individuals, or charitable groups, who would receive nothing under inheritance law, may be provided for. A Will may exclude family members who would inherit under the state “intestate” inheritance law.

A Will is a key document in putting an estate plan into practice

Federal and state estate tax planning If the property left by the decedent is likely to be subject to U.S. federal estate tax, careful planning can save substantial amounts for the heirs. There may be tax reasons for not leaving property directly to family members. Trusts are often established in Wills, to save substantial estate taxes for subsequent generations, or to manage inheritances beyond a child’s age of majority.

Planning for a guardian for minor children

If parents die without designating a guardian for their children, the court will make the choice and appoint a guardian of its own choosing. Parents of young children use Wills to tell the court whom they want to have appointed as guardian of their children, and to express their wishes about the children’s care. Courts are not bound by such provisions, but in most cases will honor them. If parents make no designation, the courts will select a guardian for the children, without guidance from the parents.

Planning for the creation of trusts for minor children

If parents die without providing for the management of the property they leave to their children, the court will supervise management by a guardian. Parents who create a trust for their children in their Wills can specify how their children’s inheritance will be administered and spent. Parents can then decide at what age their children may receive their inheritances: at age 25 or 30, or any other time. In such case, courts need not be involved. Personal and financial information remains confidential. If parents have not provided for management of their children’s property, a court-appointed guardian will be charged with management responsibility. Under court administration, family financial information may become a matter of public record when periodic accounts are placed in the court file. If there is no trust, the children will have full control over their inheritances at the age of 18.

What is a Trust?A trust is. . . .an arrangement for divided ownership of property based on a grant

to one person of power and responsibility to manage, and

to another of the right to enjoy benefits.

“Property” is any asset: real estate, money, shares in a corporation, furniture, or anything else that we “own”. In countries where the legal system originated in England, including the United States, property ownership implies a set of rights with respect to the property. An owner of property may:

use property as security for a debt

lease the property

collect rents

sell the property.

The owner benefits from increases in value, or suffers from loss in value. The owner has the responsibility of managing and caring for the property, and suffers the consequences for failure to do so. These rights and responsibilities are sometimes compared to a bundle of sticks. When the same person holds all of the “sticks”, that person has complete ownership of the property. The “sticks” represented by management responsibilities and the power to lease or sell are the “legal interest”. The remaining “sticks” that is, the rights to receive income and benefit from increases in value (or to suffer losses), are the “beneficial interest”, or “equitable interest”. This dissociation of rights and benefits with respect to ownership of any single asset forms the basis for the trust concept. Separating the legal interest from the equitable interest provides a perfect vehicle for:

managing the assets of a minor child, or of a person of advanced age who is no longer able to manage for himself

providing for the education of a child, especially in the United States, where the cost of higher education is a major consideration for families

making a large donation to a charitable institution, school, or religious body, without encumbering the recipient with the responsibility of managing the assets

providing for an inheritance by setting aside funds over time, without placing them under the control of the ultimate recipient

divesting an individual of wealth that would be taxed at death in his or her estate

managing a retirement fund for a business enterprise.

There are, of course, other ways of accomplishing these goals. The trust is unique in that it offers great flexibility, allowing the Trustor to set standards and guidelines, and thus to control the direction the trust will take. For this reason, the trust is a preferred means of management of assets and achievement of personal goals.A trust is created by the owner of property (the “Trustor”) for a defined purpose, such as one of those listed above. The Trustor generally creates a trust by means of a document, strictly defining the purpose of the trust, naming the Beneficiaries, and providing for delivery of the property to the Trustee for management and safekeeping. A trust may be created during the Trustor’s lifetime (an “Intervivos Trust”), or in the Trustor’s will, to take effect when the Trustor dies (a “Testamentary Trust”). Under the trust concept, the holder of the legal interest (the “Trustee”) has a very high degree of responsibility to the holder of the equitable interest (the “Beneficiary”). The Trustee manage or maintain property responsibly. The Trustee’s duties are strictly defined by law, and by the creator of the trust (the “Trustor”). Professional Trustees provide professional management of assets. Non-professionals (family members or other individuals) are often named as Trustees.

French Law and the Recognition of Trusts The dissociation of ownership interests in a trust is sometimes compared to the “démembrement” of property under French law, where one person (the “usufruitier”) benefits from property owned by another (the “nue-propriétaire”). The concept of a trust is slowly recognized in France with the ‘Loi de modernisation de l’Economie, of August 4th, 2008 and with the ordinance 2009-112 of January 30, 2009. The more appropriate image of property ownership under French law is a large rock, rather than a bundle of sticks. Under French law, one is, or is not the owner of property. In the French case, there is no bundle of sticks; the nue-propriétaire owns the large rock. The rights of the usufruitier are more closely compared in Anglo-Saxon law to the rights of a person who benefits from a long-term lease.Trusts and French law. The trust is slowly recognized under French law. What if the Trustee of a trust based in New York attempts to purchase a house in Provence? Who owns the house? How is the transaction taxed in France? What if a resident of France creates a trust based in New York? Analysis of questions like these is one of the more intricate exercises in Franco-American estate planning. The first step is to apply the rules of conflict of laws. If French law applies, several results are possible, depending upon whether the document creating the trust is considered a contract or a conditional gift. If French law does not apply, the results may be quite different.

A Bundle of Sticks The rights and responsibilities of property ownership are sometimes compared to a bundle of sticks. When the same person holds all of the “sticks”, that person has complete ownership of the property. The “sticks” represented by management responsibilities and the power to lease or sell are the “legal interest”. The remaining “sticks”, that is, the rights to receive income and benefit from increases in value (or to suffer losses), are the “beneficial interest”, or “equitable interest”. This dissociation of rights and benefits with respect to ownership of any single asset forms the basis for the trust concept. A trust is created by the owner of property (the “Trustor”) for a defined purpose, as a management tool. The Trustor generally creates a trust by means of a document, strictly defining the purpose of the trust, naming the Beneficiaries, and providing for delivery of the property to the Trustee for management and safekeeping. A trust may be created during the Trustor’s lifetime (an “Intervivos Trust”), or in the Trustor’s Will, to take effect when the Trustor dies (a “Testamentary Trust”).

Intestate SuccessionLegal consequences if a person dies without a will In the United States, if a person dies without a will, all of his assets will be transferred to the person’s spouse whether or not this couple has children. After transfer of the succession, the spouse becomes the only owner of all assets that was in the community property. The spouse can also receive all personal assets of the deceased spouse. In Washington State, if the person dies with children half of his personal assets will be transferred to the other spouse and the other half will be transferred to the children. If the deceased person was not married, all of his assets are transferred to his children. If the deceased person does not have children, three quarters of his personal assets will be transferred to the spouse and the left quarter will be transferred to either parent alive and if they are dead to the deceased’s brother or sister alive. The person’s spouse will also receive the totality of the assets including in the community property. If a person dies without children, spouse, brother, sister, or parents, then indirect parents such as cousins or uncle will become beneficiaries. If a person dies without will and family members direct or indirect, all of the person’s assets will be transferred to the State.

The Probate Process: When Someone Dies with a WillProbate in the United States and specifically in Washington state is supervised by the courts A court has a greater or lesser involvement, depending upon the jurisdiction. Some properties do not pass through this court-administered process such as property that is either held in trust or that passes directly to a beneficiary under a contract by means of a beneficiary designation or similar means. Certain assets of the decedent are subject to the legal process of probate. Thus, the heirs or beneficiaries generally are limited in their use or control of the property they have inherited until (i) it is determined whether that property is subject to probate, and, if so, (ii) the probate process is terminated. During the probate process, the “estate” is treated somewhat as though it was a separate entity. The estate has a legal representative, called an Executor, who acts on behalf of the estate. Through its representative, the estate can file a lawsuit, or be sued. It can buy and sell property, usually without the specific consent of the heirs. The estate is responsible for filing tax returns for itself, and for the payment of federal income and estate taxes.

Supervision by courts can be avoided It is possible for a person to provide during his lifetime for automatic transmission of assets at death via contract. The mechanisms most frequently used are described below:

Marital contract: in some states, the law allows spouses to transfer property that all of the property automatically passes to the survivor at death.

Probate in the U.S. is a public process In spite of a recent tendency to amend laws to protect the privacy of decedents and their heirs, most records of a probate are available for public consultation. This policy ensures that creditors have ample opportunity to assert their claims during a given time period, to protect the heirs of the decedent from claims of the decedent’s creditors.In contrast, property that changes hands through trust administration or by a beneficiary designation is generally not reflected in the probate process. Although such property is shielded from public view, the heirs or beneficiaries usually do not benefit from the same level of protection from creditors as they do where property is included in probate. No matter what the method for passing property at death, documents transferring title to real property will be publicly recorded.

In the United States the “notaire” does not really exist Indeed, every person has the power to designate the method that will be used to transfer property at death. During the procedure before judges, part of the function of the “notaire” will be replaced by the executor a person who will work in the best interest of the person who passed the way. Usually, a lawyer is also needed throughout the procedure. Generally in the United States, a person will see a lawyer instead of a “notaire” for the following questions:

Sale of stock options

Succession

Will

Transferring property at death in FranceA succession is administered by a public official, known as a notaire. The administration of successions by the notaire is not supervised by a court, and usually does not involve the courts at all. The notaire is responsible for ensuring that the transfer of property interests proceeds smoothly, and is properly documented. This process often involves working with multiple heirs, the preparation and execution of precise documents transferring title, and ensuring that the proper taxes are paid. Documents transferring title to property are generally maintained by the notaire in his or her office, pursuant to strict regulations. The succession is not a matter of public record.

Estate tax​ It is a tax taken by the state based on the amount of the assets of the deceased person. This tax must be paid within nine months before the transfer of property. This tax is applicable all assets belonging to American citizens, or on assets belonging to foreign living in the US at the time of the death. This tax is applicable on all assets including those located abroad. The assets can be considerable, thus it is necessary to be directed by an attorney who will act in your best interest.

Creditors’ RightsWhen the succession is controlled by courtsWhen a person dies, a particular process starts to determine his debts. The creditors must intervene within the statutory period to claim their rights. If the creditors don’t intervene, this inaction will be considered as being an implicit renunciation to their rights and they will not be able to claim their debts later.

When succession is not controlled by courtsCreditors will be able to claim their rights within six years as foreseen by the general statutory period. After six years the creditors will not be able to claim any of their rights.A party can decide to make the succession public in the objective to warn the creditors of its existence. Usually, there will be a date in this announcement that will bar the creditors’ rights if they intervene after it.

To concludeIt is simpler to take care of a succession without court intervention. There are, however, some risks that the creditors intervene even after the transfer of succession to claim their debts.

Professional Advisors Professional advisors and others have a legal responsibility to make sure that the transfer of property is carried out according to the law and the wishes of the decedent

The executorIn the United States, an Executor named in a Will or a Personal Representative appointed by a court has the legal responsibility to represent the person who has died, until the probate is closed. The Executor is often a family member who is not familiar with legal procedures. He is responsible for winding up the affairs of the deceased person. He has the responsibility to:

Make an inventory of the assets of the deceased person

Determine what debts the deceased person owed and provide their payments

Prepare taxes

Sell assets if necessary to pay debts

Distribute the assets of the estate to the persons entitled to receive them

American probate lawyerAn American probate lawyer who specializes in the administration of estates can assist the Executor in performing his or her duties. He is like a French “notaire” If the decedent’s estate does not pass through probate, a lawyer can review the transfers of property that have taken place, by operation of a trust or beneficiary designation, and assist with filing of tax returns and payment of taxes, and other matters of administration. He also makes sure that the procedure is in compliance with the judicial process.

The “notaire”In France, the Notaire is the law-trained professional charged with the responsibility to ensure that the property of the decedent passes to the lawful heirs, and that all other aspects of administration are properly handled.

Will A Lawyer’s Help Be Needed? The role of a lawyer can be whatever the Executor needs it to be: from extensive to non-existent. Lawyers can usually help when a probate is required because they are familiar with the court system, and with the process. Most law offices that do probate and estate work have streamlined procedures that permit probates to be administered in an efficient and cost-effective manner. The lawyer can relieve the Executor of much of the detail work that is involved in a probate. In some cases, law offices prepare all of the documents that are required to process the probate. In other cases, the Executor works through the process himself without a lawyer’s assistance, once the lawyer has reviewed the procedure and opened the probate. In still other cases, the Executor relies on the lawyer for guidance, but performs the greater part of the routine work of settling the estate itself. Whether or not a probate must be opened, there is almost always some action that should be taken, such as closing bank accounts, transferring title of property, preparing tax returns, and distributing the assets according to a trust document. The lawyer’s services may be useful in identifying and carrying out some or all of the tasks to be performed.

Where unexpected legal issues arise It is not uncommon for legal issues to arise involving the decedent’s assets. Such issues must be resolved before the property can be transferred to the decedent’s heirs. These issues may involve problematic title to property, lawsuits that were underway when the decedent died, or conflicting claims to property. In addition, the application of international law is needed if there are international issues to be resolved.

Maintaining a working relationship An open relationship, with frequent communication between lawyer and Executor is very important. No matter what the role of the lawyer, the Executor is responsible for the probate, and must keep track of what the lawyer is doing. The Executor must always know what is going on, what the next deadlines are, and what the issues are that must be resolved before the probate can be closed, or the trust assets distributed, and the estate administration considered complete. The lawyer is usually not a family member, so the lawyer will rely on the Executor to gather information for the lawyer.It is often emotionally difficult for the Executor to carry out the duties required of him or her, especially when he or she is a close family member of the decedent. The lawyer’s intervention can give the Executor time to grieve, while the process moves forward.

International LifestylesEstate Planning , a story not without difficultiesAn American senior executive is transferred to Lyon. A wealthy family’s daughter goes to the Sorbonne to study. A Seattle software engineer purchases that wonderful 19th Century farm in Normandy. A third-generation New Yorker is the sole heir of his Parisian grandmother.Our lives are enriched by the international aspects of our lives. Our legal rights and obligations are complicated by them. These common situations illustrate just a few issues involving inheritance rights, and potential liability for taxes during lifetime and at death, in the U.S. and abroad.The expatriate executive’s taxes at death will be determined not just by U.S. rules, but also under international treaties and French tax laws.The Spanish husband, as a non-citizen spouse of a U.S. citizen, cannot inherit his wife’s taxable estate directly without paying the substantial U.S. estate tax. Even if she establishes a qualifying trust for him to defer or avoid the tax, his use of his inheritance from her will still be limited. The Seattleite’s Will leaving all of his property to his wife is in conflict with French inheritance laws. The requirements of French law can trigger an estate tax bill in the U.S.The New Yorker’s lawyer tells him he has just inherited an estate tax problem. What is more, his carefully planned living trust cannot easily own the property in France.Most people want to minimize the effect of taxes and have as much control as possible over their assets. Close analysis of all aspects of situations such as those presented here is required to achieve these goals.

That will be facilitated by the help of a lawyerSometimes, there are simple solutions. More frequently, more sophisticated estate planning is called for and a lawyer’s intervention becomes necessary.

International estate planning“Probate”, or the process that results in the transfer of the decedent’s assets to the persons who inherit them after his death, draws on several bodies of law. Among them are real estate, inheritance law, trust law, tax law, and the law governing the collection of debts.

Conflict of laws When probate involves assets in more than one country, and the laws are different in each country, yet another body of law, known as international private law or conflict of laws defines which country’s law applies to the probate, and governs the disposition of the assets of the decedent. Some principles of conflict of laws are generally universal. In most countries, for example, what happens to real property is decided by the law of the place where it is located. A Will that provides for a different disposition will not be enforced. Similarly, the “probate” should usually occur, according to the conflict of laws rules, in the jurisdiction where the decedent resided at death.But what if. . . But what if the decedent had more than one residence? What if he spent six months in Switzerland and six months in New York, and personally considered both residences “permanent”? What if this same decedent were a dual national: holding both Swiss and U.S. citizenship? Or what if the decedent owned so many residences that he spent unequal time in three or four places each year, but considered none of them “permanent”? What if each of these residences was located in a jurisdiction that had inheritance laws those were different from the inheritance laws in the other jurisdictions? If all the decedent wanted to do was to leave the residences to his wife, he might find that something very different happened after his death. What if the decedent owed a great deal of money in one country, and had a great deal of money in trust in another country? Depending upon the countries involved, the claims of the creditors could be paid, or discharged without payment. International lifestyles create legal questions that are not always foremost in the minds of those of us who live those lifestyles.

A Word About TranslationsWe are often called upon to assist our clients in understanding a legal document written in French. We may provide, or arrange for a written translation. We may simply discuss the issues discussed in the document with our clients. We and our clients have learned some basic principles:Languages are not freely interchangeable.

Spoken or written language is an expression of culture. That which is common to the culture of the writer and reader can be easily translated.

A table is une table. Easy. Facile.

Concepts which do not exist in the language of the reader cannot be conveyed by merely translating the words of the text.

héritiers réservataires. Reserve heirs??

A translator communicates in the place of a writer. The reader must understand what the writer intended.

The translator of a legal document draws upon at least three sets of skills: (a) training as a translator in the mechanics of language, (b) knowledge of the subject matter of the document being translated, and (c) knowledge of two legal systems: the law applicable as the writer intended, and the comparable law in the legal system which is familiar to the reader.

The writer’s intentions include unspoken ideas taken for granted in the writer’s context.

In the English-speaking world, we are familiar with the trust concept. Laws governing trusts are complex. They vary from one jurisdiction to another.

If there is a need to translate a document creating a trust into French, the translator must find a way to make the concept understandable, without attempting a detailed explanation. Such an explanation could not be comprehensive statement of the law governing trusts, and could create misunderstandings.

The purpose of the translation and the type of document translated should determine how literal the translation must be.

Translators may be tempted to take liberties with a text to convey the writer’s intentions. While there may be several ways to express an idea in a literary text, legal documents by their nature must be precisely worded.

Contracts, wills, or other documents intended to achieve an objective by application of the law should be translated as literally as possible.

A poorly written source document results in a misleading translation.

Translators must guess at the writer’s intentions when documents are carelessly written. An ambiguous source document is likely to be an inaccurate translated document. To remedy this, translators sometimes use footnotes to point out difficulties in the text, if they recognize them.

Few people are truly multilingual.

The best translations are those where the translation is INTO the native tongue of the translator. A truly professional trained translator will not translate AWAY FROM his or her native tongue.